Market Mayhem

A Week from Hell for Traders and Investors

Hey Friends

I find myself captivated by the macroeconomic, socio-cultural and political implications of the upcoming American presidential election. As we hurtle towards November 5th, less than 90 days away — the political landscape is shifting dramatically.

Kamala Harris is now officially the Democratic nominee, and her surging popularity has the Republicans and Donald Trump reeling in the polls. Her airy, light-hearted and accessible demeanour stands in stark contrast to Donald Trump's gloomy, dour and insulting tone. This distinction appears to be striking a chord with voters who are extremely fatigued by the continual negativity and divisiveness that has characterized the political arena in recent years.

Just months ago, Trump was riding high in the polls, enjoying a significant lead over Joe Biden. The 46th President's accelerating aging, speech, dementia, and motor issues had become publicly evident, culminating in a disastrous debate performance against Trump that effectively ended his political career. It seemed, at that point, that Trump was an unstoppable force, destined to reclaim the White House and usher in a new era of Republican dominance.

Trump and the political right have seen a significant surge in support. By some estimates almost 50% of Americans, along with numerous figures across tech, finance, venture capital and other sectors have come out strongly for Trump. They see him as the avatar of a Great America resurgent, a saviour figure who can end the Democratic hold on power and restore the country to its former glory. Trump's message of nationalism, coupled with his promises to slash regulations, cut taxes and push back against progressive policies has struck a chord with a significant portion of the electorate.

Suddenly, with Kamala Harris's ascendancy, that narrative is being challenged. Harris, with her own unique avatar status as the first Black American woman with a chance at Presidential leadership, is attempting to connect a deeply divided country in dire need of healing. Harris speaks of bringing Americans together and of focusing on the common challenges that face the country, rather than the wedge issues that are causing conflict.

For Trump Nation, both in the West and globally, the prospect of a Kamala Harris victory in November is a horror movie. The idea that she could defeat Donald Trump and bring an end to his political machine is a shocking circumstance for many to envision. Trump's supporters see Harris as a threat to everything they hold dear — a progressive who publicly proclaims that “everyone needs to be woke,” a woman of colour, a representative of the very socio-cultural forces they believe are tearing America apart. They fear that a Harris presidency would mean open borders, socialized medicine, job-killing environmental regulations and a weakened America on the global stage.

Yet, as anyone who has followed Trump's career knows, it's never wise to rule out a man who will sell you gold-plated steaks in a pinch. The forever businessman and ultimate political survivor, Trump has repeatedly demonstrated his ability to come back from seemingly insurmountable odds. It truly feels that the only thing that will stop Donald Trump will be the inevitable effects of Father Time. Even as he enters his late 70s, Trump shows few signs of slowing down, and zero indication that he's ready to relinquish his grip on the Republican Party or his dreams of a second presidential term.

As we enter the final stretch of this historic election season, the battle between Kamala Harris and Donald Trump promises to be one for the ages. Will Harris's progressive message of hope, unity and continuing the status quo prevail — or will Trump's case for a change of direction and a return to an America-first nationalist paradigm? Will his raucous legion of supporters carry him to victory as they did in 2016?

Only time will tell.

Onwards,

Moshe Modeira

Editor-in-Chief

Commerce & Capital

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Market Alpha: Global Market Tumult

Stock Market Turmoil:?Global markets are in freefall, with the S&P 500 teetering on the brink of correction territory. The Volatility Index (VIX) skyrocketed by a staggering 65% in a single day before coming back down again to more manageable levels, echoing turbulence not seen since the 2008 financial crisis. This isn't just a blip; it's a seismic shift in market sentiment. Tech titans like Apple, Nvidia and Amazon have shed over $600 billion in value, signalling that even the mighty aren't immune to this downturn.

?? Key Insight: Don't panic, but don't be complacent either. This could be an opportunity to snatch up quality stocks at a discount, but be prepared for further volatility. This could be a much-needed reality check for an overheated market, or it could be the start of something far more ominous. Either way, now's the time to revisit your risk tolerance and ensure your portfolio is diversified enough to weather the storm.

Macroeconomic Headwinds: The ghost of recession past is haunting the markets once again. Weak economic data, coupled with the Fed's stubborn stance on interest rates, has investors questioning the resilience of the U.S. economy. Global markets are temporarily rebounding after days of bleeding, with Japan's Nikkei taking a particularly brutal hit. The yen's sudden strength is adding another layer of complexity to an already volatile global economic picture.

?? Key Insight: Keep a close eye on central bank commentary and economic indicators. The next few weeks could be crucial in determining whether we're heading for a soft landing or a hard crash.

Geopolitical Chess Moves: Bangladesh's political chessboard has been upended, with Prime Minister Sheikh Hasina resigning and fleeing the country amid violent protests. Meanwhile, Iran is threatening a large-scale attack on Israel and issuing flight warnings. These aren't just merely far-off events; they have real-time implications for global trade, oil prices, and market stability.

?? Key Insight: Geopolitical instability often leads to market volatility. Consider increasing your positions in gold or other traditional safe-haven assets. Also, keep an eye on defense and cybersecurity stocks — they often surge during times of international tension.

Tech and Legal Battles: Google just lost a massive antitrust case, with a federal judge ruling that its search engine monopoly is illegal. This isn't just about one tech giant; it's a potential shakeup for the entire Big Tech sector. Meanwhile, Elon Musk is suing OpenAI and Sam Altman for the second time, in a battle that could shape the future of AI development and regulation.

?? Key Insight: The tech sector, long the darling of investors, is facing unprecedented legal and regulatory challenges. Diversify your tech holdings and consider looking into emerging players in AI and ML (machine learning) who might benefit from a more level playing field.

Alpha Recap: We're witnessing a perfect storm of market-moving events – from stock market turmoil and recession fears to geopolitical instability and landmark legal decisions. Remember, in times of market panic, opportunities often arise for those with the right emotional temperament and sober approach. Keep your eyes open for the inevitable market bounces and rallies that follow dramatic sell-offs like we just saw in the last week.

Commerce & Capital: A Stormy Week In The Markets

Market Turbulence Analysis: August 2024

The equity markets experienced significant turbulence to begin August, leaving many investors and entrepreneurs stunned and uncertain about the future. Typically, we delve into business case studies and brand history breakdowns in this section, but for now we’re going to toggle to the current moment. The economic pain that many people are feeling right now is acute. It seems crass to ignore the profundity of this week.

Commerce & Capital is not a financial advisory. But we are sharing critical financial information — and our honest analysis of that information — because it has never been more important to the everyday person. Here’s a basic breakdown of current market events, and the possible implications moving forward:

1.??Unprecedented Volatility: Volatility?— how fast stock prices change — is commonly used as an indicator of market sentiment. The more fear that the market detects in the actions of market participants, the more haywire the VIX goes, and that’s when you know things are going wrong systemically.

The Volatility Index (VIX) is a real-time gauge of stock market volatility. Simply put, the index is a snapshot of how financial professionals are feeling about near-term market conditions.?The index, commonly known by its ticker symbol, is often referred to simply as “the VIX.” It’s an important instrument in the world of trading and investment because it provides a quantifiable measurement of investors’ sentiments.

The VIX is like a fear thermometer for the stock market. It measures how much the prices of big U.S. companies — tracked by the S&P 500 — are bouncing around within a 30-day period. When stock prices are calm and steady, the VIX measures as low. When stocks are jumping up and down a lot, the VIX measures as high. The VIX is the pulse of market emotion.

Not only can you track the VIX to see how fearful or excited the market is — you can also bet on it. Just like you can buy and sell stocks, you can buy and sell things based on what you think the VIX will do.

The VIX surged by 58% in a single day following the release of weak economic data this past week. This spike surpasses even the volatility seen during major crises like the 2020 COVID-19 crash (49% over 3 months) and the 2008 financial crisis. Such an extreme move in the VIX is a clear indicator of heightened market fear and uncertainty.

2.?Historical Context: The magnitude of this volatility spike is historically significant. The last time we saw similar levels of volatility was during the onset of the COVID-19 pandemic, and before that, during the 2008 financial crisis. This puts the current market situation in a very serious context, suggesting that we may be on the brink of a major market event.

3.??Market Psychology and Momentum Trading: This turbulence exposes the risks of complacency and momentum trading. Many investors have been rabidly chasing high-performing stocks (like the Magnificent 7) without conducting proper due diligence or considering fundamental valuations. This behaviour can lead to significant losses when market sentiment shifts.

4.?The Value of Disciplined Investing: While it may have been tempting to ride the wave of popular stocks in 2024, a disciplined, rules-based approach to investing can provide better long-term results and protection against market downturns. This includes strategies like:

• Taking profits during periods of extreme valuation
• Maintaining a diversified portfolio
• Implementing hedging strategies
• Considering contrarian positions when markets appear overvalued

5.?The Importance of Risk Management: In times of market exuberance, it's crucial to consider downside protection. Strategies such as buying "insurance" through put options or maintaining short positions can help offset potential losses during market crashes.

6.?Economic Warning Signs: The weak economic data that triggered this volatility suggests underlying problems in the economy. Investors should pay close attention to economic indicators and be prepared for potential further market declines.

7.??Expert Warnings and Contrarian Views: It's worth noting that many financial experts have been sounding the alarms about market overvaluation and potential crashes. While these views may seem pessimistic during bull markets, they often provide valuable perspective and can help investors prepare for market turns.

8.??Global Economic Concerns: Canada's growing economic troubles highlight that market turbulence is having global implications. Investors should consider how international economic factors might impact their portfolios.

CTA: Understand That This Week Was A Real-Life Call To Action

This recent market turbulence serves as a wake-up call for investors who may have become complacent during the bull market. It highlights the importance of disciplined investing, proper risk management, and paying attention to fundamental economic data. While the situation is concerning, it also presents opportunities for well-prepared investors to capitalize on market dislocations.

As we move forward, it will be crucial to monitor economic data, central bank actions, and global economic developments closely. Investors should review their portfolios, ensure proper diversification, and consider implementing hedging strategies if they haven't already done so.

Remember, while market downturns can be unsettling, they often create opportunities for those who are prepared and maintain a long-term perspective. As always, we welcome hearing from you and would love to hear your stories of how you are altering your investment approach to weather the current storm and what your experience has been like this past week ???? ??

Mission: Things I'm Working On

I'm excited to announce that I will be collaborating with Bledin & Co., a Toronto-based custom promotional products supplier that's revolutionizing the branded merchandise industry. Working with my former partner from Lazypants, we're on a mission to elevate physical marketing for companies and brands worldwide.

The vision is simple yet transformative: bring high-quality fabrics, superior design, and refined aesthetics to custom apparel and branded merchandise. We're moving away from the era of disposable company swag — replacing it with products that people will actually want to wear keep, and use.

Bledin & Co. leverages a global network of manufacturers to offer:

1. Apparel
2. Promotional Products
3. Custom Packaging
4. Printing

My role is overseeing sales and accounts execution, ensuring that Bledin & Co. delivers on the promise of quality, reliability and speed.

The DNA of the vision remains the same as it always has even going back to the early 2010s: a commitment to world-class experience, personalized support, industry-leading turnaround times and precision execution of clients' visions. We're focused on meeting global market demands while simultaneously maintaining strong support for local clients, customers and communities.

Trending Now

?? Social Media

One of my new faves is vlogger JOEL — Joel Roache. This is unbelievable crafted content that is a must-watch. Roache documents a recent trip to the Dolomites in Italy, showcasing both the beauty and challenges of travel. Joel explores the stunning mountainous landscape and shares thoughts on personal growth and gratitude. JOEL epitomizes the next epoch of what Youtube will be, what content from the next wave of popular YouTubers will feel like. Superbly edited yet free-flowing storytelling, raw, open and vulnerable supported by dazzling filmmaking technicals.

An interesting social experiment where a fictitious 5-star ramen restaurant gets packed with customers in just 7 days. Serving only instant ramen to unsuspecting customers, with the help of clever marketing, a website, social media campaigns, and outreach to food influencers, YouTuber Stanley Chen’s team manages to generate significant buzz and attract a crowd in just one week. The team improvises a temporary restaurant space and concocted elaborate stories about the restaurant's history and menu concept. Despite serving nothing but instant ramen and facing a few close calls, they successfully fooled dozens of customers, including influencers, who praised the taste and uniqueness of the dishes. The experiment underscores that BRAND IS EVERYTHING — presentation, marketing and atmosphere can significantly influence people's perceptions and experiences of quality and value.

?

This couple had a Star Wars-themed wedding! Instead of the traditional wedding dance, these newlyweds squared off, brandishing lightsabers and really getting down and dirty. Appreciate the deep commitment to fandom here.

?? Book Shelf

Generative AI and LLMs for Dummies - David Baum: Baum offers a beginner-friendly introduction to the complex world of artificial intelligence. The book simplifies intricate concepts, breaking down generative AI and large language models (LLMs) into understandable terms. It guides readers through the process of developing LLM applications, emphasizing the importance of data governance and security. While focusing on practical applications, the book also covers ethical considerations and potential challenges. Overall, it serves as a valuable resource for anyone looking to grasp the fundamentals of this rapidly evolving field.

The Undoing Project by Michael Lewis. This book chronicles the revolutionary partnership between Israeli psychologists Daniel Kahneman and Amos Tversky, whose work challenged traditional notions of human rationality in decision-making. Lewis skillfully weaves together their scientific breakthroughs on cognitive biases and heuristics with a compelling narrative of their friendship and collaboration. The book explores how their insights have profoundly influenced diverse fields such as economics and medicine, while also offering readers a new perspective on their own thought processes.

Masters of Doom: How Two Guys Created An Empire And Transformed Pop Culture by David Kushner. A captivating dive into the birth of the modern gaming industry that I am thoroughly enjoying. This book chronicles the meteoric rise of John Carmack and John Romero, the brilliant minds behind id Software. This real-life tech adventure follows the duo from their early days as passionate programmers to becoming revolutionary game developers who forever changed the industry with titles like Wolfenstein 3D, Doom and Quake. Beyond just a tale of game creation, the book explores the cultural tremors caused by their work, from igniting debates on video game violence to ushering in the era of multiplayer gaming.

?? Article Of The Week

Bitcoin and Stock Market Correlation: Are They Really Linked? — Siddhant Kejriwal, CoinBureau: A critical examination for anyone asking the question of how corollary the Bitcoin market and public markets really are. The answer is that the relationship between Bitcoin and the stock market is complex. While there are periods of correlation, particularly in recent months, the overall connection is weak and inconsistent. Factors like market sentiment, technological advancements, regulatory changes and liquidity significantly influence Bitcoin's price movements independent of the stock market. While the two asset classes may share some commonalities as speculative investments, their underlying drivers often diverge, making diversification crucial for investors.

See y’all next week! Would love to hear your thoughts — leave your comments below.

Join the discussion on social media. Follow us on?Instagram, LinkedIn, X & TikTok. Have feedback, questions or suggestions? Reply to this letter ??

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